Farkas bail: $2 million

A federal judge on Wednesday set bail at $2 million for Lee Farkas, the former chairman of Taylor, Bean & Whitaker Mortgage Corp., and he could be out of custody as soon as Wednesday afternoon.

By Suevon LeeStaff writer

A judge on Wednesday set bail at $2 million for Lee Farkas, the former Taylor, Bean & Whitaker Mortgage Corp. chairman who faces federal prosecution. Although the 57-year-old Ocala resident was not able to secure that amount by day's end, his attorneys said they were “cautiously optimistic” he would do so by this morning, ending his confinement in the county jail.

Farkas was arrested June 15 outside an Ocala gym he owns and has been held without bail ever since. He is accused of orchestrating a $1.9 billion fraud scheme that caused his company and a major bank to topple last year. The 16-count federal indictment alleges, among other things, bank, wire and securities fraud over a seven-year period while he was head of one of the nation's largest private mortgage lenders.

In August, Taylor Bean filed for bankruptcy, as did the parent company of its main lending institution, Colonial Bank.

U.S. Magistrate Judge Gary R. Jones' decision to set bail was made over the government's request to hold Farkas in pre-trial detention. Federal prosecutors argued he was a flight risk based on the scope of his alleged scheme, the value of his remaining assets, and the severity of his sentence if convicted of his charges.

“He has shown a facility to deceive. Certainly, that facility would be redirected towards flight,” argued Patrick Stokes, of the U.S. Department of Justice Fraud Section, during Wednesday's hearing at the Ocala federal courthouse.

In his order, Jones cited multiple reasons to deny the government's request: that Farkas has continued to reside in Ocala despite learning of a possible federal investigation against him as far back as last fall; a restraining order issued by another federal judge that has effectively frozen his assets; the lack of evidence showing he has offshore funds; and his “long and extensive business and community ties to Marion County.”

It was agreed during the hearing that a $2 million bond would be secured by mortgages on Farkas' southwest Ocala home and a piece of Fort Lauderdale property owned by a friend, Sean Murla.

The defendant's sister also is helping. She has agreed to forfeit her Albuquerque, N.M. home if Farkas doesn't meet the conditions of his pre-trial release.

Among those conditions: Farkas was ordered to surrender his passport, limit his travel to within Florida's Middle District, and be subject to wearing a GPS monitoring device. He's prohibited from selling any assets worth more than $1,000; cannot engage in any financial services activities; and cannot contact people whom prosecutors consider co-conspirators. The government will provide Farkas a list of such individuals but won't make it public.

Farkas will be allowed unrestricted travel to Atlanta and Miami, where his attorneys are based, and to the Eastern District of Virginia, where his criminal case will be tried.

Farkas and his co-conspirators — who so far have remained unnamed — are alleged to have misappropriated more than $400 million from Colonial Bank and $1.5 billion from Ocala Funding. They are also accused of attempting to defraud the U.S. government of $553 million in Troubled Asset Relief Program (TARP) funds.

If found guilty as charged, Farkas faces up to 435 years in prison, fines of at least $13.75 million and forfeiture of at least $22 million in assets.

During Wednesday's nearly three-hour hearing, Farkas once again wore a jail jumpsuit, seated between his Miami-based attorney Gerald J. Houlihan and Atlanta attorney Brian F. McEvoy. He frequently could be seen shaking his head during the government's presentation to the court and conferring with his lawyers.

Question: Should the judge have allowed Lee Farkas to post bail?
-----

In his arguments to the judge, the Justice Department's Stokes suggested that, as the government's investigation progresses, the value of the alleged fraud scheme may exceed the $1.9 billion outlined in the indictment.

Stokes portrayed Farkas as “the leader of the conspiracy” and “the prime benefactor of the conspiracy,” but softened previous suggestions that he may have an offshore account.

“In all candor, it's ambiguous evidence,” Stokes told the judge. “At this time, we just don't know enough about it.”

Federal prosecutors also expressed concern that Farkas had transferred at least two real estate assets over to his friend Murla, including a $1.7 million piece of property in Silver Springs Shores and an apartment complex in Ocala worth about $700,000, shortly before his arrest.

A mortgage placed upon one of the properties had been invested in an Atlanta-based mortgage company called United Funding, which Farkas' attorneys denied Wednesday was part of any suspect transactions.

Houlihan vigorously asserted his client's innocence Wednesday. In asking the judge to set bail, he emphasized Farkas' longstanding ties to the community and denied he posed any flight risk due to his limited travels outside the country.

Jones asked when it became apparent that Farkas learned of the government's investigation and realized indictment was inevitable.

McEvoy responded that Farkas had been advised as of October 2009 of the seriousness of the charges he possibly faced and the corresponding sentence.

“I don't think it was any secret who the government was looking at,” McEvoy told the judge.

Contact Suevon Lee at 867-4065 or suevon.lee@starbanner.com

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.